From Texas, I mostly cover the energy industry and the tycoons who control it. I joined Forbes in 1999 and moved from New York to Houston in 2004. The subjects of my Forbes cover stories have included T. Boone Pickens, Harold Hamm, Aubrey McClendon, Michael Dell, Ross Perot, Exxon, Chevron, Saudi Aramco and more. Follow me on twitter @chrishelman.

10/18/2011 @ 11:54AM101,986 views

Some Tips For The Simpletons of 'Occupy Wall Street'

The following is a guest column by, Richard B. Finger, a private investor with Ariadne Capital LLC, in Houston, Tex. The opinions expressed are his own.

My philosophies may be diametrically opposed to those of the simpletons in the Occupy Wall Street movement, but when it comes to the banks and the government, my anger makes me kindred with them.

I realized this on a recent cool, crisp October morning in Houston. With summer’s gross heat and humidity gone, the weather is finally ripe for complaining. It’s hard for me to remember the last time I attended a rally or demonstration either as observer or participant. “Occupy Houston” had arrived in Texas. Approaching the JP Morgan Chase building, the tallest in Houston, I heard the chants: “We want jobs, we want jobs.” The chants morphed seamlessly into: “Corporate greed has got to go.” The crowd really got lathered up on this one.

An amusing and (previous to me) noted irony is with all the railing and carping over corporate evils, it was hard to miss the Apple I-phones and I-pads. Certainly present were also phones powered by Google’s android system. The Nike swoosh was prevalent. I can only guess the number of these corporation bashers who own Microsoft products. I even saw that elitist Ralph Lauren logo. Hard to know which nefarious corporation makes the cardboard for all those signs, but it is most certainly a big bad one that probably employs a whole lot of people. If they buy “green” electricity, (assuming they purchase any at all), which any demonstrator with an ounce of self-righteousness would, there’s a real good chance they are supporting one of the biggest and “baddest” of them all, wind turbine manufacturer General Electric. Carefully ignored by these do-gooders is the confluence of grand creativity, greed, and billions in profits and millions of jobs these profits and cupidity have created.

Of course, signs with “we are the 99%” were ubiquitous. I have since understood this pithiness as something of a “corporate” logo. Pun intended. Judging from the recent employment reports, a more accurate mantra might drop one of those 9’s.

One twenty something female with a large nose ring and indeterminate hair color told me she really didn’t know what the exact platform was, though her unambiguous paperboard dispatch said, “take from the rich and give to the poor”. Call me prejudice, but if the credibility of an organization is inversely proportional to tattoos and body piercings per square inch, this is a movement of dim prospects. One much older gentleman, (probably fortyish) claimed the Federal Reserve was a private company and should be handed to the government henceforth. I attempted a small dose of enlightenment but quickly met rabid intransigence. Another, a ponytailed stick like figure, explained the movement as one designed to give the country “back to the people”. What? I queried a pregnant woman who had just rushed from yoga class to protest home foreclosures. Apparently, it was monumental injustice that the big bad bank was enforcing its contractual rights in light of over a year of non- payment. Comfort in being surrounded by the same species of fish. Engulfed in a haze of nescience was all I could feel. Amid this scene of “organized chaos” and disjointed dialogues there were some themes that personally resonated. “Bank CEO’s Should Be in Jail” was one. Well, probably at least some of them. Another sign, “JP Morgan’s $10 billion in bonuses belongs to us” might bear some debate.

Since attending the Houston rally, the movement has metastasized globally to include hundreds of thousands or even a several millions. Notwithstanding, the “Occupy Wall Street” movement, even egged on by our president, so far, in my opinion, has little more than nuisance value. Defacing parks, mini rioting and getting arrested analogizes them akin to the clutch of ragtag farmers with shovels and pitchforks marching on the local government demanding rain. These people don’t even know what their hostility is about.

With no cohesive defined platform there can be no discernable end game. The only certitude is being very very angry. For sure, there is plenty to be aggravated about. So guess what, I’m really mad too. And polls consistently reveal that so are a vast majority of Americans no matter political stripe. Until late summer 2008 our economy, despite showing some signs of stress and trending down, was pretty much cruising along. And then along came the Lehman bankruptcy, the AIG bailout, TARP, revelation of the extent of the mortgage crisis and associated speculations, and failure of Fannie Mae and Freddie Mac. People were minding their own business and all of the sudden a cataclysm occurred. Unemployment soared, bank credit seized up, and our country was in recession. While there is some improvement from the 2009 bottom, the country continues mired in a malaise of slow growth and unacceptable unemployment. The result has been a zeitgeist, heartily promulgated in Washington, of “the banks are evil and it’s all their fault so they are not entitled to profits ever again”. Much more accurate is the top eight to ten banks employ well over one million people. They have paid all of their TARP money back, in full, with interest. These banks have helped and continue to assist millions of people obtain home mortgages and provided businesses, small and large, with working capital and other loans to expand, further increasing employment . When a bank makes a loan the very best outcome it can hope for is to get paid back with interest. What is also true is that there were (and still are) a few really bad apples at the banks, the investment banks (although they are now defined as banks), the ratings agencies, and the GSE’s (Fannie and Freddie).

BUT, in many ways, our system has worked. Banks made loans equal to 90, 95 and even 100% of home values. When homeowners (speculators?) could not meet their mortgage payment obligations, banks enforced their contractual right to foreclose. Borrowers might have lost their down payment (5-10%), but banks were stuck with the rest of the risk and downside. The real loss has been borne by banks and their shareholders. A real transfer of wealth has gone from bank shareholders to defaulting homeowners. Exaggerated anger against the banks might be misdirected.

Though certain that “Occupy Wall Street” participants are in large part diametrically opposed to my economic philosophies, anger is the thread that makes us kindred. Much of the simplistic, often puerile, often non-sensible amorphous ranting ought to be “matured” to a more specific platform. Perhaps my partial list of ills might aid this unorganized mass to channel their indignations more productively:

–While banks accepted government loans and support, bankers felt entitled to billions in bonuses paid in 2008 and 2009. Bank boards were complicit in these awards. Egregious, unfair, and yes, immoral under the circumstances at the time, these should be “clawed back” (repaid back to the banks) and distributed to innocent shareholders who suffered.

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“A real transfer of wealth has gone from bank shareholders to defaulting homeowners. Exaggerated anger against the banks might be misdirected.” “Much of the simplistic, often puerile, often non-sensible amorphous ranting ought to be “matured” to a more specific platform. ” Perhaps using words such as “ simpletons”, “exaggerated “, “puerile” and “ranting” are not intended to simplify and dismiss the complex message from OWS, but it certainly appears that way. Perhaps a closer look at what OWS members are actually saying instead of the chants, which obviously are intended to be simple and repetitious, would help Forbes understand and assess the movement (if that is its intent). It would be easier for everyone (or at least for journalists) if a few “leaders” stood up and took control of the OWS message. But that is not the intent of OWS. Rather, it is intended (I believe) to build a consensus and learn what should be the message and, possibly, a legislative agenda. The truth is that there are clear problems and the banks are a big part of those problems. There is undoubtedly some truth to your assertion of speculation by homebuyers. However, a great portion of the easy money that fueled that speculation was provided by banks who sold off these toxic assets to “investors” who were themselves nothing more than speculators. There is no way to divorce the consumer’s responsibility from that of the banks in this very large mess. However, consumers are held accountable by foreclosure, destruction of their credit, and humiliation. The big banks that fueled the bubble should be broken up, their executives banned from the industry and prosecuted if appropriate, and new safeguards should be established to ward off corruption and stupidity until someone learns how to subvert those and we are back in economic collapse looking for someone to blame.

The banks paid their TARP loans out of greed. They were required to wait 3 years and stay under extra regulations (such as executive pay caps). They were allowed to repay the loans early so they could go back to business as usual.

And in the case of “back to business as usual,” for Citigroup, Bank of America and others, it means NOT paying taxes while laying off hundreds of thousands of people just to improve the company’s bottom lines for shareholders.

Then, have the GOP cut programs to support the unemployed, effectively leaving these formerly middle-class people homeless and destitute.

And in the case of “back to business as usual,” for Citigroup, Bank of America and others, it means NOT paying taxes while laying off hundreds of thousands of people just to improve the company’s bottom line.

Then, have the GOP cut programs to support the unemployed, effectively leaving these formerly middle-class people homeless and destitute.

When have the protesters on the street ever had a good understanding of the issues they rail against? Actually, when have any large group of people ever had a deep understanding of …. anything.

They are protesting the smoke… which usually correlates to fire. You’ve pointed out some of the big systemic problems we have that are slowly growing out of control, and that is the fire creating the smoke that they are protesting. True, without an understanding of the problem, their solutions will be absurd (ie. rob the rich), but if we had politicians able to actually do something about the broken system, maybe they wouldn’t feel the need to be out there protesting the symptoms of the problems.

I feel for most the people out there on the street. They know something is terribly wrong, and have no idea how to fix it. They believe the so-called elites have found a way, not only to win, but to change the rules to make it impossible for them to lose… and really, once you boil it down – aren’t they right?

Speak for yourself meat head. Who are you calling simpletons? We are lawyers, doctors, students, factory workers….and representative of every demographic in the USA. I personally have a 159 IQ and am very insulted by you referring to me and others in the group as “simpletons.” You are projecting. Not only are you grossly unconscious…you are ignorant and uninformed and are lumping a very complex group of many demographics as “simpletons”. Nothing could be further from the truth you idiot.

You are kidding, right? The poor banks got saddled with sooo much debt because of the forclosures? The bank that made a loan at 7% interest while paying out 0.025% interest lost a lot of money? No, they didn’t. What they lost was FUTURE income. The money that was loaned out was insured. Don’t believe me, then perhaps you should look at the term PMI or Premium Mortgage Insurance.

So, in the end, the banks got reimbursed from the insurance companies on their losses, then the Federal Gov’t gave them more money to prop up their profits, and on top of all that, they made out with the property that will eventually be able to be sold again. Sounds to me like they lost nothing….and their current profits and corporate bonuses suggest I am correct.

I understand that much of bad debt was already bundled and sold to foreign investors, which meant that much of this Ponzi scheme was already sent down the river before it affected the banks who made the bad loans in the first place.